The Cost Of A Grande Latte

Posted by on Aug 31, 2011 in Blog | 4 comments

The Cost Of A Grande Latte

A new survey from ING Direct revealed only one in two Canadians are able to put away an extra $25 a week. Most people I know make it a daily habit to go to their local Starbucks on the way to and/or from work each weekday. It’s easy to spend $5.00 or more a day on the luxury of a cup of coffee.

What if instead, you skipped the morning drive thru and saved that $5.00 each weekday and put it down each month as a mortgage prepayment?

By forgoing the morning coffee each weekday and saving $5.00 instead, you would save an extra $25.00/week and be able to put an extra $1300 into your mortgage.

Assuming a $250,000 mortgage with a 4.5% interest rate amortized over 25 years making bi-weekly accelerated payments, if you made a lump sum payment of $50 each bi-weekly payment:

By skipping the weekday morning coffee you could pay your mortgage off 11 years and 9 months earlier and save a whopping $72,496.91 in interest over the life of your mortgage!

Think about that the next time you’re ordering a Grande Latte.

Scott Dawson
scott.dawson@verico.ca
  • http://twitter.com/debtcoachcanada Eric Putnam

    Great post Scott.Working with Canadian families improve their finances and eliminate their debts, we have found that it’s the small changes to spending habits, such as cutting down on the lattes and eating out less often, that consistenly provides the cashflow that can be redirected  towards specific and realistic goals, including paying down debts. There is a free resource at http://bit.ly/lO1UVA that we have been told by many folks helped them open dialogue with their partner/spouse around improving their finances. Cheers! Eric Putnam, Debt Coach Canada , http://www.debtcoach.ca

  • http://www.tyrellmara.com Tyrell Mara

    Great post, Scott! 

    This is good timing for me as I will be entering the housing market in the next couple years. I think the real value in this post is making the connection between a small daily expense (Starbucks) and how it can actually have a huge impact on a very large cost (mortgage). You have made this connection straight, forward, easy to understand, and also illustrated the potential significance it could create! 

    Thank you for the great post!
    @TyrellMara:twitter 

  • http://www.scottdawson.ca/ Scott Dawson

    Thanks for the comment Tyrell. I was amazed myself when I did the calculations.
    As you move towards making your first purchase don’t hesitate to content me anytime if you had any questions. I love working with first time buyers!

    Scott

  • Brian

    Scott-great post.I am on a crusade in 2012 to educate people about the value of a mortgage broker and to educate them on the difference a  mortgage broker can make in their financial future.

    Check out Facebook Mortgage Straight Talk
    regards
    Brian